A sample of positive confirmations is mailed for material accounts receivable balances.Frequently there is a lack of response.Which of the following is not an acceptable alternative procedure?
A)Reviewing collections on the account subsequent to the confirmation date.
B)Inquiry of management.
C)Mailing second and third confirmations.
D)Examination of supporting documents.

Question

Quizplus · Accepted Answer

Mailing second and third confirmations or examining supporting documents are acceptable alternative procedures to obtain confirmation for material accounts receivable balances. However, inquiry of management should not be the only alternative procedure used because it lacks independence and objectivity. It is important for auditors to corroborate the information provided by management with other sources of evidence. Therefore, choice B is not an acceptable alternative procedure for lack of response to positive confirmations.

A Sample of Positive Confirmations Is Mailed for Material Accounts